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A mid-30's Canadian that has been trading since 1999. Awarded CFA Charter in 2007. My focus is always on the risk-return balance. Finding plays that have limited downside either through strong cash balances or intrinsic value. Alternatively, looking at options with low margin... More
  • Rimage (RIMG) growth plans 0 comments
    Dec 9, 2010 10:46 AM | about stocks: QUMU

    Rimage corp (RIMG) has a mature business where they offer CD and DVD one-stop copying systems, used for storage of records and for small quantity custom distributions.
    These all-in-one units have applications with the government and with corporations for data management.

    While Rimage is still generating steady but declining revenues from the sale of these units, and importantly from the proprietary consumables needed to run these units, they have identified the need to evolve and find new areas of growth.

    Last year, they started a launch into the Chinese medical market.  Using mostly existing hardware, they offer a digital solution to hospitals which currently record client medical information on film.  In Q3, they received the business license for China, have established a Shanghai office, and are building out the sales force.  Revenues are expected in the near term.

    Taking their existing hardware and making slight changes and software modifications, they also created products for video surveillance.  This includes security applications - with government sales already delivered, and a collegiate sports video program - with sales already delivered as well.

    However, as a $150mm market cap company with $106mm (Q3) in debt-free cash, those were the easy fruit to pick as they came with very low R&D expenses and good ROI.

    Rimage recently decided it was time to open the pocketbook and build for the future. 
    They are taking their war chest and working toward a new solution.


    In discussions with their broad base of clients, Rimage identified the need for a secure online publishing platform - to manage, store, and securely deliver digital content direct to desktops.
    The company is getting ready to shift into the software space, while continuing to focus on data storage.  This is their wheelhouse.

    To proceed, Rimage recently secured floor space in the Indian city of Hyderabad - a well known IT hotspot.  Getting a tax-favored office of 3200 sqft, they will put together a development team to build out this new initiative.

    With a new technology rollout and turnover of a mature business, the company has added new officers for the challenge:
    - A new Chief Technology Officer, who came over from leading the critical products group at Seagate,
    - A new VP Marketing, who was previously a VP Business Development at GWW, 
    - A new CFO with a background as CFO in technology focused companies with market caps up to $2 billion,
    - Led by a new CEO who was previously a VP Marketing at Seagate.

    In the investing world, RIMG's strategy is termed 'organic growth', building from the ground up based on their existing strengths.  They have also not ruled out the inorganic approach, and may in fact be looking for a partner or acquisition to speed along their online publishing solution.

    This is a time of change at Rimage.  It continues to have sales, revenues and earnings from its mature product line.  It finds and develops add-on capabilities for existing hardware, seeking new markets and growth areas.  And it is building the next generation of offerings with internal cash and new leadership. 

     Keep an eye on this name.

    Disclosure: I am Long RIMG.
    Stocks: QUMU
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